Optimal Provision of Public Inputs in a Second Best Scenario: a Numerical Simulation

• Autores: Diego Martínez López, Antonio Jesús Sánchez Fuentes
• Localización: XII Encuentro de Economía Pública. Evaluación de las Políticas Públicas: Palma de Mallorca. Los días 3 y 4 de febrero de 2005, 2005, pág. 54
• Idioma: inglés
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• Resumen

  • This paper studies the optimal provision of public inputs under two different tax settings: with lump-sum taxes and with taxes on labor.

    After obtaining optimal rules for the provision of public inputs, a numerical simulation is carried out to compute the level of public spending in each scenario. We find that the level of public input provided under a second best scenario is higher than that corresponding to a first best outcome, with a bigger social welfare too.